Berkeley considers city-wide minimum wage hike

Some Berkeley business owners said last week, at an info session hosted by the Berkeley Chamber of Commerce, that a higher minimum wage would pose challenges and have unintended consequences. Photo: Emilie Raguso

A mayor’s office request to set Berkeley’s minimum wage more than $2 above than the state-mandated $8 per hour will be discussed at two city meetings this week.

The proposed policy shift has some local business owners concerned about whether they can afford the change, and how it might affect the city’s economy. Proponents of similar measures say they increase income equality and provide the people who earn the least with more room for discretionary spending.

Tuesday at 3 p.m., a Labor Commission subcommittee will tackle the issue, followed by a full-commission meeting Wednesday at 7 p.m. (Details appear at the bottom of this story.)

The Berkeley City Council voted April 30 to ask commission members to help craft a new city-wide minimum wage ordinance. The council asked the commission to use a San Francisco law, which went into effect in 2013 and set the minimum wage at $10.55 per hour, as a model. Unlike the San Francisco law, however, Mayor Tom Bates said Berkeley’s ordinance should consider special parameters for tipped employees. It would also include an annual cost of living adjustment.

The city predicts increased purchasing power for minimum-wage workers, and increased costs for their employers, as a result of minimum wage policy changes. Administrative and enforcement costs are listed as “unknown” in a recent city report.

Last week, the Berkeley Chamber of Commerce held a session at its office downtown to help members of the local business community strategize and get informed about the city’s plans. Representatives of restaurant associations from two other cities were invited to share best practices and lessons about minimum wage policy battles in San Jose and San Francisco. Councilman Laurie Capitelli also attended the meeting, along with Calvin Fong, senior aide to Mayor Bates.

Fong noted the distress expressed in April by numerous local business reps, who were caught “by surprise” by the mayor’s request to change the city’s approach to its minimum wage. Fong apologized to those in attendance and said the city aims to foster an inclusive process to come up with an ordinance that has input from a wide range of community members.

“This is still a moving target. We don’t have anything set in stone as far as the ultimate outcome,” he told the roughly 20 people in attendance. “This is just the beginning of a process, and we hope to have some really fruitful discussions and come up with something that will work for all of us.”

Fong said Bates was inspired by ordinances in San Jose and San Francisco that advocates say raise the minimum wage to a more realistic rate. He said public outreach would be a big part of the process, and that Berkeley would put a lot of thought into how to handle enforcement issues going forward.

Javier González, director of local government affairs for the San Jose-based California Restaurant Assocation, discussed the San Jose minimum wage decision, which was passed by voters in November. González said unions across the nation are taking up the cause to raise the minimum wage, and that restaurant owners and other small businesses often bear the brunt of such policy changes because they have more low-wage workers than white-collar businesses such as lawfirms.

In San Jose, he said, some restaurants have cut back on employee hours or let employees go to handle increased costs. Some have raised menu prices and others have been looking into moving out of the city. González said that, because San Jose’s ordinance didn’t have a special clause for tipped workers, the law is actually increasing inequity by boosting the wages of wait-staff, and leaving less money available for raises, bonuses or other perks for people who work in the kitchens and don’t receive tips.

Rob Black, executive director of the Golden Gate Restaurant Association in San Francisco, said that city’s ordinance is making businesses more vulnerable to retaliatory, baseless complaints due to its complaint and enforcement structure. He said the city had lost “a lot of low-wage, neighborhood-serving retail and other types of jobs” in the past four years as a result of new ordinances dealing with the minimum wage, paid sick leave and health care.

Black took issue with the methodology behind a 2007 report that found San Francisco’s minimum wage ordinance increased worker pay and had no detectable employment losses; he said researchers used county-level data that prioritized residency over place of employment, which he claimed skewed their findings.

Angus Teter, chairman of the city’s Labor Commission subcommittee on the minimum wage issue, said the group would be taking a close look at the relevant studies, as well as critiques of the studies. He said it could take perhaps a year for the commission to hash out the matter in a methodical, inclusive way.

“There is a lot of public pressure behind this right now,” he told the group.

Natalie Kniess, of the Berkeley Restaurant Alliance, said a number of local eateries are concerned about increases for tipped employees, as well as the broader issue of a boost to the minimum wage. She named Comal and Gather as “new ventures with huge overhead” that hadn’t planned for wage hikes. Kniess, co-owner of Bistro Liaison, said her businesses’ payroll costs would increase about $26,000 per year if the city increases the minimum wage. And, with 5% profits being the industry standard, she added, she’s not sure where the money will come from.

“This is not a business-friendly climate overall when you have such high taxes and when you’re compounding all these issues together,” she said. “We are not ‘fat cats’ counting our money. We make 5 cents on the dollar, guys. Where’s it [the money to cover increased costs] going to come from?”

Virginia Carpenter, co-owner of Berkeley Ace Hardware, said, if the changes go through, she’d have to reconsider her current offerings for employee health coverage and other benefits such as sick leave and vacation pay.

“I can take a heck of a lot, but to just keep piling it on top of us is way too much,” she said.

John Caner, executive director of the Downtown Berkeley Association, said local representatives “want our voices at the table,” and that the chamber should work on finding available members who could fill two vacant slots on the city’s Labor Commission. Currently, noted several people in attendance, there are no business owners on the panel.

According to a city staff report posted in April, the city already has a living wage ordinance — requiring wages of at least $9.75 per hour plus $1.62 for benefits, or $11.37 for hour without benefits. The ordinance only applies to firms that do business with the city of Berkeley, however.

A city report published in March noted that only about 17.1% of the jobs in Berkeley are actually held by Berkeley residents, “a proportion that has declined over time as the somewhat higher than average rents and home prices in Berkeley has caused more people employed here to look elsewhere in the region for housing.”

Tuesday at 3 p.m., a Labor Commission subcommittee will discuss the issue, followed by a full-commission meeting on Wednesday at 7 p.m. The Tuesday meeting will take place at 2180 Milvia St. in the Redwood Conference Room on the sixth floor from 3-5 p.m. The Wednesday meeting will take place at the North Berkeley Senior Center, 1901 Hearst Ave., at 7 p.m.